A comprehensive digital transformation of the financial sector in Bahrain includes rolling out a Digital Dinar but does not adopt the crypto sector. The head of the Central Bank of Bahrain (CBB) warned against cyber-crime and dealing with cryptocurrency, speaking during the press conference on Saturday.
Plans of digital transformation of Bahrain’s financial sector include rolling out a Digital Dinar (CBDC), which will complement but not replace paper money, revealed Central Bank of Bahrain (CBB) Governor Rasheed Al Maraj.
“Our plans for a digital transformation is key to our future strategy for the next five years, which comes hand-in-hand with rolling out many products in terms of payments and settlements,” he told the GDN on the sidelines of a Press conference at the Isa Cultural Hall on Saturday, announcing a strategy to develop the financial services sector.
He also highlighted that banking sector assets reached $211.7 billion in 2021.
“We are working with all the key players in the industry – BenefitPay, financial institutions, and the banks – in order to make this transformation seamless and smooth in order to bring to customers facilities for their daily use that are competitive, efficient, and with very little cost,” the Governor said. “The Digital Dinar will complement the paper money, and it’s not a replacement, and this will hopefully plug into this transformation plans.”
Also present at the conference were Economic Development Board chief executive Khalid Humaidan, Bahrain Bourse (BHB) chief executive Shaikh Khalifa bin Ebrahim Al Khalifa, and Bahrain Institute of Banking and Finance (BIBF) director-general Dr. Ahmed Al Shaikh.
“The strategy prioritizes creating job opportunities, developing legislation and policies, improving the financial market, developing financial services and FinTech as well as the insurance sector,” Mr. Al Maraj added. “Performance indicators of the success of the five-year strategy will also include a reduction in dealing with paper money by 25pc, preserving the steady growth of electronic financial transactions to ensure it doesn’t fall below 10pc as well as increasing the contribution of the financial sector to GDP to 20pc by the end of 2026.”
In the meantime, Mr. Al Maraj also warned against cyber-crime and dealing with crypto-currency and urged people to protect their personal information. He also emphasized the importance of raising awareness in society regarding fraudulent calls, text messages, links, and emails.
The Governor said the CBB’s strategy also includes establishing a cyber emergency response team in the financial sector, developing a system for immediate implementation of judicial orders issued by courts at Justice, Islamic Affairs and Endowments Ministry, updating the Bahrain Central Bank and Financial Institutions Law, restructuring the directives folder, connecting the Bahrain Bourse to the emerging markets index and linking clearance, settlement, and central depository systems, regionally and internationally.
The CBB last month warned against the dangers of investing, contributing, dealing with, or trading any amounts of money with any person(s), company, institution, or website, including social media, before ensuring they have obtained the required licenses from CBB to engage in such activities.
There are currently 367 licensed financial institutions in Bahrain with a 13,737 workforce contributing to 17.9% of the country’s GDP, with plans underway to expand that to 20pc further. Meanwhile, cryptocurrencies aren’t controlled by the CBB and haven’t been licensed yet.
Earlier this month, The Reserve Bank of India (RIB) has voiced “serious concerns” about private crypto and announced the launch of its own central bank digital currency (CBDC) by December. As the senior government official told Reuters, the plan is to ban private crypto-assets ultimately while paving the way for a new CBDC.